A sound investment process and strong management team underpin JPMorgan Healthcare Leaders ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in liquidity exposure and an overweight in momentum exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And momentum exposure is rooted in holding stocks currently on a winning streak. This management team earns an Above Average People Pillar rating, despite recent turnover in its ranks. The strategy's parent organization earns the firm an Above Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Eli Lilly

UnitedHealth Group

AstraZeneca

Regeneron Pharmaceuticals

AbbVie

Danaher

Johnson & Johnson

Cigna

Stryker

Banco Santander

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Jpmorgan Healthcare Leaders ETF earns an Above Average Process Pillar rating. 

The most significant contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 56%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The size of the portfolio management team also strengthens the process. With two portfolio managers, the fund is reasonably well-resourced. Lastly, the process is limited by being an actively managed strategy. Historical data, like Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

 This strategy skews toward larger, more growth-oriented companies compared with its average peer in the Health Morningstar Category. Analyzing additional factors, this strategy consistently held some companies with relatively lower trading volume compared with Morningstar Category peers in the last few years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In the latest month, the strategy was also less exposed to the Liquidity factor compared with Morningstar Category peers. This strategy has also demonstrated more exposure to high-momentum stocks over peers in recent years. Momentum is based on the premise that stocks that have recently outperformed will continue to outperform, and those that have underperformed will stay behind. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. During the last few years, this strategy has also tilted in favor of high-quality stocks, those that have demonstrated low financial leverage and solid return on equity. Such holdings could cause it to trail peers during economic booms, but help it better withstand busts. In this month, the strategy also had more exposure to the Quality factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio has allocations in its top two sectors, healthcare and energy, that are similar to the category. The sectors with low exposure compared to category peers are basic materials and technology; however, the allocations are similar to the category. The strategy owns 67 securities and is relatively top-heavy. Of the strategy's assets, 47.8% are concentrated within the top 10 holdings, compared to the typical peer's 41.0%.

Above Average

Process

Jpmorgan Healthcare Leaders ETF earns an Above Average People Pillar rating. The number one contributor to the rating is its parent firm's five-year success ratio of 56%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The combined average five-year excess return of each manager also supports the rating. It suggests that the funds they manage have exceeded the average manager. Lastly, the rating is limited by the instability of its management team. The fund last saw a manager change zero month ago, which suggests that it could do more to retain its portfolio managers.


Dominic Valder is a new manager with only one year of listed portfolio management experience under their belt. The average Morningstar Rating of the strategies they manage is 3.4 stars, demonstrating above-average risk-adjusted performance compared to category peers. The team is small and inadequately equipped, with only one other listed manager supporting it. Together, the two average one year of listed portfolio management experience. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

People

A well-resourced, thoughtful, and disciplined steward of client assets, JPMorgan Asset Management maintains an Above Average Parent rating.
As of 2022, this investment stalwart manages more than USD 2.5 trillion in AUM. Composed of various global cohorts and diverse asset classes, the firm has more tightly integrated its capabilities in recent years, notably through the development of proprietary analytical and risk systems. Investment teams are robustly staffed and helmed by seasoned contributors. The firm’s strategies tend to produce reliable portfolios, and several flagship offerings are Morningstar Medalists. Manager incentives align with fundholders'; compensation reflects longer-term performance factors, and portfolio managers invest in the firm’s strategies as part of their compensation plans. 
The firm’s funds tend to be well-priced, but they aren’t as competitive as many highly regarded peers of similar scale. Recent product launches include thematic and single-country strategies, both of which carry the potential for volatile performance and flows, along with misuse by investors. The firm remains intrepid when it comes to developing an environmental, social, and governance-focused framework and continues to move into other areas such as direct indexing through its 55iP acquisition and China through its joint venture, but these complicated initiatives take time to assess any real and lasting effect.

Parent

JPMorgan Healthcare Leaders ETF

JDOC is actively managed, investing in equity securities issued by pharmaceutical, biotechnology, healthcare services, healthcare technology, medical technology and life sciences companies located around the globe.The adviser seeks to provide long-term capital appreciation.

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News for JPMorgan Healthcare Leaders ETF ETF (JDOC)